Wednesday, 26 January 2011

Bear Baiting

After yesterdays shock news on the economy, came Mervyn the Wrong's comments on the UK economy. Now, some people who have read this blog for a while will know that we are no fans of the Bank of England here. The Bank was far too complacent before the financial crisis.

Today though, there are bears running riot in every paper and on the Opposition benches. The UK is doomed, the economy is weak beyond belief, everything is terrible.

Things just are not so grim in the UK to get too over-excited about one GDP number. And Mervyn's point about living standards is correct, which is why having assets like shares, precious metals and commodities is so important to maintain above inflation returns; but we have known this for a long time now.

The real threat to the UK comes from a sclerotic Europe and weak Euro. This is our export market, if the Euro crumbles and Sovereign debt concerns rise about Spain then the UK is next in line and I will be a lot more worried.

11 comments:

Sebastian Weetabix
said...

"Europe is our export market" - true enough, but...hmmm... I spend a lot of my time trying to increase my firm's sales into the BRICS, with a modicum of success. I certainly don't need government permission or (heaven forfend) "help"; we chose to do this 10 years ago because any fool could see that Europe's industrial base was going to be hollowed out by the rise of China and the rest, so if we didn't do something we would suffer steady decline. Usually I find people are quite happy to buy from the Brits, and we do still have a name for making some excellent top end stuff. That of course is the key, chasing after humdrum commodity stuff is a waste of time.

But I am always, as a German former colleague liked to say, "negatively astonished" by the huge number of firms in Britain who seem to make no effort to widen their customer base in new markets. No wonder we get our collective arses kicked by the Germans, Japs & Yanks.

"... as is the unwillingess of firms to open up offices outside of Europe" ... that's because all governments (our 'leaders') have told us, for the last 40 years, that out future is in 'Europe'. And people have believed them.

Our standard of living in plummeting.Our quality of life is plummeting.Our life expectancy is plummetingThe chances of decent job are plummetingEarnings power is plummeting.Public service provision is plummetingFood supplies are plummeting

@Roym: In the 1970s the government (mainly via the Diplomatic Service personnel resident in-country) ran a very effective operation in persuading (generally first-time) British exporters to make the world their oyster. However, for some unknown reason this international match-making service putting exporters directly in touch with potential clients (and vice versa) was allowed to decline and is but a shadow of its former self - to the general detriment of the UK's exporting efforts. Having been a beneficiary of this service I am fairly sure the opportunities discovered by the folks with their feet on the ground overseas more than made up for the costs of keeping them there.